RISK MANAGEMENT?
The minutes to the FOMC’s September meeting:
- “most” participants judged it would likely be appropriate to “ease policy further over the remainder of the year.”
- “A majority” of participants saw risks to inflation as skewed to the upside.
Expectations for consumer price increases one year ahead jumped to 3.4% in September from 3.2% in the prior month.
China Tightens Grip on Rare Earths Ahead of Expected Trump-Xi Meeting Beijing requires export licenses for goods made with certain rare-earth materials and tech from China, even when manufactured abroad
China tightened its control over critical minerals used to make high-tech products including electric vehicles and jet fighters, threatening to reignite trade tensions with the U.S. ahead of an expected meeting between President Trump and Chinese leader Xi Jinping.
China’s Commerce Ministry said Thursday that foreign suppliers must obtain approval from Beijing to export some products with certain rare-earth materials originating from China if they account for 0.1% or more of the good’s total value. Goods produced with certain technologies from China are also subject to the export controls. Both restrictions apply to products manufactured outside of China.
Export applications for products with military uses generally won’t be approved, the ministry said, adding that licenses related to semiconductors or artificial-intelligence development will be granted on a case-by-case basis.
The controls expand on Beijing’s moves earlier this year to require licenses for exports of certain rare-earth metals and related products. Automotive, electronics and defense companies in the U.S. and around the world have struggled to get supplies, elevating China’s grip on rare earths to a central place in trade negotiations with Washington.
China has spent decades building up its dominance in global rare-earth mining and processing, giving Beijing significant leverage that it has flexed this year. It produces around 90% of the world’s rare earths and controls much of the supply of many other critical minerals. Suppliers for the U.S. military are dependent on Chinese materials used to make items such as drones and missile-targeting systems.
The new rules signal that China is extending its control further down the rare-earth supply chain as the U.S. and other Western countries aim to build up domestic industries and reduce reliance on China. (…)
In explaining its new rules, China’s commerce ministry said Thursday that some foreign organizations and individuals had transferred or supplied rare-earth materials of Chinese origin to entities involved in military and other sensitive fields, posing serious harm and potential threats to China’s national security.
The latest export controls cover technologies used in rare-earth mining, smelting and other processing steps, the ministry said. Some of the controls take effect immediately, while the rest will be in place starting Dec. 1.
It wasn’t immediately clear from the guidelines how China intends to enforce the new rules.
The ministry said Chinese suppliers will be required to issue a compliance notice to overseas buyers for items considered dual-use, meaning products that have both civilian and military applications. Foreign exporters using those Chinese components are also required to issue a compliance notice to the next recipient.
Exports for humanitarian purposes—emergency medical care, responses to public health emergencies, or natural disaster relief—are exempt from the dual‑use export license requirement for overseas exporters, the ministry said. But the exports should be reported to the ministry within 10 days via email.
Entities identified on China’s export control list, including subsidiaries or firms of which they hold majority ownership, will generally not be approved for exporting dual-use items and technology, the ministry said.
The U.S. also has a trade blacklist known as an entity list for companies it says pose national security risks. The Trump administration recently expanded its controls to subsidiaries of entity list companies, targeting China’s tech sector.
Protecting national security goes all ways now…
China to Launch New Visa to Lure Young Tech Talent Amid U.S. Curbs
China is launching a new visa category for young foreign technology talent, a move that comes just as the Trump administration sharply increases the cost for U.S. companies to hire high-skilled overseas workers.
China will add a K-visa to its ordinary visa categories, a foreign ministry spokesperson announced Monday. The policy, already written into the revised Regulations on Administration of the Entry and Exit of Foreigners on Aug. 7, is designed to attract young science, technology, engineering and mathematics (STEM) professionals.
First Brands’ Go-To Bank Jefferies Opens Books as Fallout Builds
As First Brands’ banker for more than a decade, Jefferies’ name appeared frequently during the company’s ascent to a conglomerate of aftermarket automotive parts. In recent weeks, though, New York-based Jefferies has come under scrutiny for its relationship with a company that collapsed into bankruptcy in spectacular fashion last month amid concerns about its reliance on supply-chain financing.
On Wednesday, Jefferies sought to clear the air, laying out in the most direct terms yet how it is — and, just as crucially, isn’t — exposed to potential losses tied to First Brands. (…)
while Jefferies’ potential losses tied to the saga seem likely to be manageable — Morgan Stanley analysts earlier on Wednesday put them at a maximum of nearly $45 million — new details on the collapse keep coming to light. Later that day, a First Brands creditor alleged that as much as $2.3 billion of trade finance assets had “simply vanished” from the auto-parts supplier. (…)
Jefferies, once something of a banking underdog, has steadily risen to become more of a competitive force in investment banking — known for leading more aggressive deals. While it lacks some business lines that make the larger Wall Street firms multiples its size, it’s ensconced in the part of global finance that’s periodically one of the hottest: Helping companies tap the capital markets and prowl for deals. (…)
More recently in July, Jefferies was pitching investors on a roughly $6 billion refinancing deal for First Brands. But lenders in that debt began raising concerns over the company’s use of trade financing. Their concerns prompted the pause of the refinancing effort in August and the decade-long relationship suddenly appeared on less solid ground: Jefferies struggled to get information from the company, it told investors. First Brands filed for bankruptcy in late September. (…)
On Wall Street, where corporate financings serve as connective tissue, the ripple effect of the fiasco quickly spread — including to a US regional lender. Part of Point Bonita’s exposure to receivables owed to First Brands was pledged into a leveraged facility with Phoenix-based Western Alliance Bancorp., meaning that bank would be on the hook if those assets went bad.
Some firms have already started lining up to pull money from Point Bonita: BlackRock Inc. and a Texas public fund have requested partial redemptions in recent weeks, Bloomberg reported Wednesday.
(…) First Brands bankruptcy filing, which listed more than $10 billion of liabilities on its Chapter 11 petition, set off a round of damage limitation by Wall Street firms now attempting to size up their exposure to the company. A fund controlled by a unit of Jefferies Financial Group Inc. has about $715 million invested in receivables due by First Brands’ customers.